Natural-gas futures at 20-month high with storage at two-year low

SAN FRANCISCO (MarketWatch) — Oil futures finished with a loss of more than 1% on Thursday to log their first decline in four sessions after the International Energy Agency modestly cut its forecast for growth in oil demand.

Natural-gas futures, meanwhile, hit their highest close in 20 months as U.S. supplies of the commodity in storage remained at their lowest level in about two years.

May crude oil
US:CLK3
lost $1.13, or 1.2%, to settle at $93.51 a barrel on the New York Mercantile Exchange, giving back Wednesday’s 44-cent gain and then some. Prices had tallied a climb of 2.1% over the past three sessions.

London-traded benchmark Brent crude saw its May contract
UK:LCOK3
decline $1.52, or 1.4%, to close at $104.27 a barrel on ICE Futures after a 44-cent fall in the previous session.

Reuters

Oil moves lower after IEA reports a modest cut to its demand forecast.

Thursday’s losses came as the International Energy Agency cut its outlook for global oil-demand growth to 795,000 barrels a day from a previous forecast of 820,000 barrels a day, adding to existing worries that demand is fading.

OPEC reduced its own global oil-demand forecast in a report issued Wednesday.

The IEA forecast cut reflected weak demand from industrialized countries and in particular Europe, where consumption in 2013 is expected to be the lowest since the 1980s.

Matthew Parry, senior oil market analyst at the IEA and author of the report, told MarketWatch he has essentially left the 2013 demand forecast unchanged.

“The media headlines are all about how I’ve reduced this forecast,” but there’s no mention of how this is just 0.05% of demand, he said.

“We still have a relatively bearish supply-demand balance for the rest of the year,” Parry said. “However, ongoing geopolitical concerns will likely continue to remain a theme of the market in 2013.”

The IEA report also highlights falling OPEC output and a further decline in Iranian exports, but it referred to global demand as being “subdued.”

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Oil production from the Organization of the Petroleum Exporting Countries fell by 170,000 barrels per day in March from a month earlier to 30.25 million barrels per day, according to a Platts survey of OPEC and oil industry officials and analysts released Wednesday.

The IEA said it “may be too early to call a bear market and there are signs that some of the recent easing of upward price pressures could be short-lived.”

Analysts at the Kilduff Report said they “remain constructive on oil prices, believing that the Asian demand will remain strong and Saudi resolve to lower production ... [will] keep oil prices out of a bear market.”

Natural-gas prices at 20-month high

Natural-gas futures finished at their highest in 20 months after the EIA reported a 14 billion-cubic-foot decline in U.S. inventories for the week ended April 5.

That decline was smaller than had been expected. Analysts polled by Platts had forecast a decline between 20 billion cubic feet and 24 billion.

But “natural-gas storage now sits at its lowest level since April 2011, with storage now at a 32% deficit to last year’s level,” said Matt Smith, commodity analyst at Schneider Electric.

And the decline is bullish when compared with the increase the market saw for the same period a year ago, he said. However, this will likely be the last withdrawal of the winter season, he added.

May natural gas
US:NGK13
added 5 cents, or 1.3%, to end at $4.139 per million British thermal units. It climbed 7 cents on Wednesday.

That was the highest close for a most-active contract since August 2011, according to data from FactSet.

Among other energy futures, May gasoline
US:RBK3
extended its 2.6% tumble from Wednesday, edging 3 cents, or 1.2%, lower to $2.83 a gallon. The contract had sold off in the previous session after the EIA’s weekly report showed an unexpected increase in stockpiles.

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